Conflicts Of Interest: Safeguarding Investor Trust In Securities Markets

Vrinda Taneja, BBА.LLB (Hons.) (Corporate Law), School of Law, University of Petrоleum and Energy Studies, Dehrаdun

Arjun Sharma, School of Law, University of Petrоleum and Energy Studies, Dehrаdun

ABSTRACT

The growing concern over conflicts of interest arising from market intermediaries in the capital market is addressed in this paper. This study explores the complex dynamics of the relationship between investors and intermediaries, looking at different types of conflicts that arise in the current complex market environment. With particular reference to the SEBI (Intermediaries) Regulation, 2008, the focus is on comprehending the difficulties encountered in a market dominated by intermediaries, particularly in preventing conflicts of interest between intermediaries, investors, and issuer companies. The study furthermore emphasises the danger that conflicts of interest pose to investor protection and the fairness of the securities market as a result of the growing reliance on middlemen in contemporary capital markets. The study proposes regulatory strategies to address this problem by holding intermediaries accountable and liable for their actions in conflict of interest scenarios. It also supports policies like imposing self-regulation and developing a moral corporate culture. In order to improve the fight against conflicts of interest and reduce related risks, the paper highlights the significance of long-lasting principles in addition to regulations. Various situations involving securities market intermediaries and conflicts of interest are covered throughout the paper. It suggests that conflicts of interest will probably increase as the market develops and grows, highlighting the need for regulation to stop abuse and reduce losses.

Keywords: Conflict of interest, Security market intermediaries, Regulatory framework, Investor protection, Securities market, Self-regulation, Ethical business culture, Internal, control systems, Governance, Accountability